Tag Archives: Roger Melanson

The deficit facts of life


Balance the budget, certainly; but not just yet. In a nutshell, this was what New Brunswick Finance Minister Roger Melanson told assembled ladies and gentlemen of the press and other observers at Tuesday’s provincial budget announcement.

Still, though it seemed to take almost everyone off guard, the news that annual deficits – despite this year’s combination of tax hikes and spending cuts totaling nearly $600 million – would be facts in our lives until at least 2020-21 was not actually surprising.

In fact, a careful review of the budget measures reveals that some sort of pernicious shortfall was always in the cards.

On the revenue side, yes, the Gallant government raised the Harmonized Sales Tax to 15 per cent, from 13 per cent, effective July 1. And, yes, it also goosed the corporate income tax rate to 14 per cent, from 12 per cent; increased tobacco taxes by three bucks a cigarette; boosted the one-time property transfer tax; and hiked capital tax rates on banks.

On the other hand, the finance department decided against tolling any roads in the province, and even snuck through a modest decrease in the income tax rate the province’s top earners face.

On the spending side, yes, the government announced it was slashing 1,300 civil-service jobs over the next five years; 30 per cent of middle-manager positions were on the chopping block. And, yes, it also terminated the Gagetown ferry; amalgamated its 40 contact centres across the province into four; and froze operating grants to universities.

Again, though, it left both the departments of education and health virtually untouched – at least, in any significant way. Both Mr. Melanson and Health Minister Victor Boudreau recently confirmed that there’s very little appetite among the voting public for dramatic cuts to these, the province’s largest and most expensive program portfolios.

The results, then, are largely predictable: a deficit this year of $347 million; a deficit of $267 million in 2017-18; $167 million in 2018-19; $49 million in 2019-20; and a yet-to-be determined surplus in 2020-21.

Said Mr. Melanson about his “fun-with-figures” exercise over the past few weeks: “The decisions we are announcing today on expenditures and revenues will lead us to a balanced budget and meet our commitment to get our finances in order. This is very important because we currently spend more on serving our debt than we do on post-secondary education.”
Complicating matters, of course, is the economy, which isn’t broadcasting especially cheerful signals these days. “Economic activity is expected to be tempered by demographic realities, private-sector investment, fiscal measures, and the recently announced suspension operations at the Picadilly mine,” Mr. Melanson reported.

Naturally, what frustrates close political watchers in this province is the fact that a $300-million tax-revenue boost haul will have only a modest impact on New Brunswick’s bottom line.

The deficit is now running at approximately $466-million. If the Province’s projections prove to be accurate (and, be honest, when have they ever?), the next-year-over-this-year improvement in the annual shortfall will be somewhere in the neighborhood of $100-$120 million.

That’s not bad, but it’s nothing to write home about. And it’s certainly not likely to quell the concerns of business lobbyists, who think taxes are the devil’s work, and fiscal hawks, who believe New Brunswick can find multiple savings in its health and education systems if its political leaders are willing to close surplus classroom, consolidate hospitals and clinics and take a meat cleaver to the associated labour force.

To be fair, though, who’s going to do that?

Our deficit, it seems, will be with us for a while.

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For whom the road tolls


“Popular” is not exactly the word that leaps to mind when talking about toll roads and tax hikes, but if you’re contemplating steps to render both as facts of life for New Brunswickers, a little spin goes a long way.

So it was earlier this week when the provincial minister of the Gallant government’s strategic review, Victor Boudreau, and Finance Minister Roger Melanson, very nearly spilled the beans, observing that of all the options for eliminating the provincial deficit they’ve presented to the public, the most “popular” were tolling roads and raising the HST.

Of course, neither Liberal MLA spoke directly to either issue in advance of next week’s budget, preferring, instead, to issue vague assessments of the vox populi’s current mood on the twin subjects of spending cuts and revenue raising.

Mr. Boudreau: “There has been a lot of work being done over the last number of months. I do think you’re going to see something that is going to, at the end of the day, address the fiscal challenge we are facing as a province, but doing it while maintaining. . .balance.. . .New Brunswickers have made it clear they don’t want to see deep cuts to health care and education.”

He also allowed that the debate over toll roads has been the most interesting component of the consultations: “A lot of people want tolls, but very few people want to pay for them.”

There you have it, ladies and gentlemen: This province’s existential problem in a nutshell. We New Brunswickers want to lasso the moon; we just don’t want to buy the rope.

In this, of course, we’re no different than anyone else. Still, our unique set of economic circumstances insists that we adopt a colder-eyed approach to solving our shared problems than ever before.

When Mr. Gallant began his review of government spending months ago, he declared that everything was on the table – on both the expenditure and revenue side of the ledger.

If that’s true, then next week’s budget should reveal a dramatically reduced (in both size and cost) civil service, with those savings redirected into strategies and programs that are likely to grow the economy and create jobs and, in so doing, goose tax revenues to public coffers.

But let’s not kid ourselves. We are well past the point where even the most efficiently run government and bureaucracy can pull our fat from the fire. This is not an overnight proposition. It will take years of lean, mean management in the public sector to keep the ship of state of a steady keel.

In the meantime, emergency measures are urgently, if lamentably, necessary. And that means tolls and taxes, neither of which, incidentally, need be especially onerous.

Virtually every economist I’ve consulted over the years stipulates that taxes on consumption are eminently more efficient and fundamentally fairer than levies on income. What’s more, those who subsist below a certain standard of living ought to receive rebates equal to their HST outlays.

Indeed, if all provinces along the East Coast actually harmonized again their harmonized sales taxes into one 15 per cent regime for all, as Nova Scotia Premier Stephen McNeil suggests they do, the unfair competitive pressures on the private sector would melt.

Tolls are somewhat more difficult to administer and collect than taxes without undermining the monetary value of the exercise, itself. But it can be done, and to great effect, as it is in other jurisdictions across North America.

Think of taxes and roadway fees as temporary measures that, nonetheless, toll for thee.

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What’s wrong with this picture?


As a resident of this fair province, New Brunswick, it’s a hopeless comfort to know that while the rest of Canada slips quietly into recession, I may expect to keep my head above water and even thrive during the two minutes it takes me to attach the absurdity filter to the worn and threadbare spectacles I use to read the morning headlines.

So it was the other day when I came across this marvelous series of proclamations from New Brunswick’s finance minister, dutifully reported in the pages of provincial newspapers:

“Nationally, we’re in a recession and Stats Canada has confirmed it,” Roger Melanson said some days ago. “So we will continue to monitor the situation on a quarterly basis. That’s why we have quarterly updates. It’s the tool we have in terms of making the information public so New Brunswickers are fully aware of the state of our economy.”

Yet, his finance department boldly predicts an annualized growth rate in the province of between 1.5 and 1.7 per cent next year. Why? Because the economic auguries say so? Because the entrails of road kill on the Trans-Canada are aligned just so? Because the tea leaves in the lunchtime cups left on the cafeteria tops at Freddy Beach suggest better times ahead?

How bluntly irrelevant Minister Melanson’s claim is – especially when you consider that most New Brunswickers are already fully aware of the state of their economy. Indeed, as the nation dips into recession, this province has never managed to crawl out of a long, agonizingly slow one.

The essential quandary is: Do we care?

Go back into history see the same ludicrous patterns repeating today: A province whose economy is bifurcated by rural and semi-urban sensibilities; an institutional sector that will protect its turf at the expense of the students, professionals, patients, and citizens it purports to represent; a political culture whose last, good idea for meaningful change died when the New Brunswick inventor of kerosene did.

The agony that Mr. Melanson does not address when he talks of scraps of GDP improvement in this province in this year is the long, slow dissolution of self-reliance, self-improvement, and enthusiasm in this province.

Where are the monumental projects of imagination?

Who will build the next generation of entrepreneurs willing and ready to break the molds crafted by their forbears?

What new cohort of young people, coupled to older folks, stands to step up in this province to usher a renaissance of economic, social and political principals and priorities?

These are the questions that political leadership in this province should pose. Instead, Mr. Melanson seems content to rely on the predictions of statisticians and economic actuaries to spin a wobbly tale of good news about New Brunswick’s prospects.

“It’s important to note,” he says, “that every province, including us, have adjusted their GDP projection based on growth. . .(With the exception of Prince Edward Island) we’ve all brought it down because of the national situation economically. But we still have to keep in mind that there are sectors of our economy in our province where we have seen positives.”

T’was ever thus, perhaps. But our present condition demands sterner stuff from our elected representatives, appointed bureaucrats and, in the end, us.

Our future cries out for it.

Canada’s national recession may be a lamentable circumstance; ours, in New Brunswick, is a state of mind.

We have, in this province, only two avenues: becoming or calcifying.

We either fossilize or shunt the ties that bind and live in hope.

Through my threadbare spectacles, I choose hope.

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Accounting for pricey election promises


How toothless are New Brunswick’s booked rules to force political parties, in campaign mode, to explain exactly how they will make good on their spending promises? Indeed, how opaque is the Conservative machine’s commitment to transparency?

The provincial Liberals want to know and have been demanding answers since late June when the Tory-inspired Fiscal Transparency and Accountability Act came into effect. At that time, the Grits issued a statement, under their leader Brian Gallant’s imprimatur.

“It’s clear that this government is focused solely on spending announcements to help their election campaign, and not on growing our economy or creating jobs,” he said. “It’s ridiculous and unacceptable. This government is burying election promises in government announcements so they can avoid their own transparency legislation that requires all promises to be costed in election platforms,” said Gallant.

Last week, the Liberals were at it again, charging that the Conservatives have made $433 million worth of spending promises without independently costing out those announcements. They even unveiled a spreadsheet that, they say, accurately reflects the dollar value of each Tory vow between June 24 and August 20.

In contrast, insisted Liberal Dieppe candidate Roger Melanson, “We are being transparent and accountable. I think the outgoing premier who set out the rules in this legislation should follow the same rules.”

For their part, the Tories aren’t talking. In June, however, then-Finance Minister Blaine Higgs told the Saint John Telegraph-Journal, “If they (Liberals) know something that has been promised or announced that’s not in their budget, well, then they should tell me because I don’t know about it. . .Anything during the election process will then be identified as either new money or budgeted money. It will have to be costed if it is new money.”

To which Mr. Melanson retorted, “If that’s the case, it means they were using taxpayers’ money. . .to try to buy their votes.”

There is, of course, more than a healthy dose of political posturing on both sides of the issue. But the bottom line is that all of this is largely beside the point.

To begin with, the Fiscal Transparency and Accountability Act is a fundamentally silly piece of legislation. It mandates that political parties assign dollar values to their campaign promises and threatens to strip them of their tax-funded operating allowances if they don’t. But it says nothing about the fact that when the provincial government is flat broke, putting price tags on election promises is utterly meaningless.

The Act also enshrines the following, as yet, unachievable priorities: “Annual balanced budgets on or before the end of the first fiscal period;con or before the end of the first fiscal period, the Province’s net debt for a fiscal year will be less than the net debt for the preceding fiscal year; on or before the end of the first fiscal period, a net debt-to-GDP ratio that is at or below 35 per cent; and after March 31, 2017, quarterly fiscal updates will include a statement of the actual expenses and revenue to the end of the quarter to which the update relates.”

And the penalty for failing to meet these objectives is a walk to the metaphorical woodshed unless, of course, the following contingency applies: “The Minister may recommend to the Lieutenant-Governor in Council that the applicability of sections 6, 9 and 10 be suspended for any fiscal year if the Minister is of the opinion that an economic or financial crisis has occurred that makes it unreasonable for those sections to apply in that fiscal year. . .On the recommendation of the Minister, the Lieutenant-Governor in Council may issue an order that sections 6, 9 and 10 do not apply in the fiscal year set out in the order.”

So, then, do we not now endure an “economic or financial crisis” in this province? Or what would we call a $12-billion debt and $500-million annual deficit?

Transparency and accountability are functions of money management. First comes the money. Then comes the management.

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Setting the fiscal stage for a political melodrama



It is organizationally awkward, bureaucratically regressive and probably unworkable. 

But say this for the drafters of New Brunswick’s newest law designed to reign in public spending: When it comes to crafting high, political theatre, they hold a candle to no one; certainly, no other Canadian legislator of similarly hawkish mien.

With one merry swoop in deference to the provincial election, coming soon to a voting station near you, Finance Minister Blaine Higgs has tabled the Fiscal Transparency and Accountability Act, which he says will render New Brunswick “one of the most accountable provinces in Canada.” 

It will do this, apparently, by requiring government to reduce the deficit by at least $125 million – or, as the case may be, preserve a budgetary surplus – in any given year. The consequences of failure would, for the first time, directly hit each cabinet minister where he or she lives: in the pocketbook, and in the form of a $2,500 penalty.

The Act, its proponents claim, will also restore common sense to the administration of the province’s finances – which currently labour under a $500-million deficit and a long-term debt of almost $12 billion – by compelling political parties to put a dollar figure beside each of their election promises at the risk of losing their annual operating allowances.

In his official statement in the Assembly, Mr. Higgs struck a triumphant tone.  “New Brunswick will be the only province with this level of transparency required for election promises,” he said. “Elected representatives must be accountable for taxpayers’ dollars, not only when making commitments to voters, but also when making decisions at the cabinet table. Just as New Brunswickers must face personal consequences for not keeping up with household bills, Mr. Speaker, so must elected representatives see personal consequences for not keeping up with our province’s bills. That. . .is true accountability.”

Perhaps; still, it’s odd that the only way this government seems able to deliver “true accountability” to taxpayers is by functioning as if it were its own trustee in bankruptcy

In effect, these new schedules of penalties for non-performance and injunctions against empty promises all but concede that government is a wastrel. It’s a deadbeat dad whose awful track record with the family’s nest egg has landed the whole clan in the chicken coop. It can’t be counted upon to do the right thing on its own. 

Clearly, then, the solution should be obvious: The Tory government will regulate itself, just like before; only. . .well, better.

Astonishingly, the province’s other main parties seem all too willing to oblige Mr. Alward and company in legitimizing this fiction.

Liberal finance critic Roger Melanson made a good show of his faux opposition on Wednesday when he intoned, “To have the minister of finance present this piece of legislation and make a statement like this, it’s quite ironic in the fact that if you look at the specific results from this government and this minister of finance for the last three-and-a-half years, he has missed his financial targets over and over and over.”

A New York minute later he had this to say: “It (the Act) makes sense and I think taxpayers, New Brunswickers, are expecting any political party or any government to be accountable, to be transparent and to be financially responsible.”

But how valid is that commitment when it’s delivered under threat of self-imposed reprisals in the event that the government falls off the spending wagon once again?

Moreover, what are the new costs associated with administering a law that must involve third parties to mete out its complex brand of justice? Are there mitigating circumstances that might waive the various fines and levies? If so, when and how do they kick in?

According to the legislation, cabinet ministers are off the hook if certain “extraordinary events” such as recessions, natural calamities and other so-called acts of God cost the budget $20 million or more. Again, though, who decides what fits the definitions, and what are the mechanisms? 

One element does seem clear, much to the expected chagrin of the Canadian Taxpayers Federation. In a nicely sneaky and utilitarian way, the new legislation essentially guts the archly populist (and retrograde) Taxpayer Protection Act. 

Now, a government that faces a $400-million annual deficit in New Brunswick no longer needs to hold a referendum to obtain the public’s expressed permission to raise new taxes or hike the HST.

Here, then, witness one piece of political theatre stooping to conquer another in high style, indeed.


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